C.B. Trucking, Inc. v. Waste, 1st Cir. (1998)

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<pre> UNITED STATES COURT OF
APPEALS FOR THE
FIRST CIRCUIT 
____________________ 
 No. 96-2347 
C.B. TRUCKING, INC., 
 Plaintiff - Appellant, 
 v.
 WASTE MANAGEMENT, INC.,
ET AL., Defendants Appellees. 
____________________ 
 APPEAL FROM THE UNITED STATES DISTRICT
COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Morris E. Lasker,
U.S. District Judge] 
____________________ 
 Before
 Torruella, Chief Judge,
 Godbold, Senior Circuit Judge, and Barbadoro, District Judge.
 
_____________________ 
 Edward J. McCormick, III, with whom McCormick & Maitland was
 on brief for appellant. J. Anthony Downs, with whom A. Lauren
Carpenter and Goodwin, Procter & Hoar LLP were on brief for appellees. 
 
____________________ 
 March 2, 1998 
____________________
BARBADORO, District Judge. C.B. Trucking, Inc. brought
 this action against Waste Management of Massachusetts, Inc. and its
 parent, WMX Technologies, Inc., alleging, among other things, that
 defendants had illegally attempted to monopolize the residential solid
waste collection business in southeastern Massachusetts through a practice of
predatory pricing. Treating defendants' motion to dismiss for failure to state a
claim as a motion for summary judgment, the district court summarily disposed
of the predatory pricing claims. On appeal, C.B. Trucking asserts that
 the district court erred because it: (1) failed to properly notify the parties
of its intention to convert the motion into a motion for summary judgment; (2)
ruled on the motion without giving C.B. Trucking an opportunity to conduct
discovery; and (3) granted summary judgment even though facts material to the
motion remained in genuine dispute. We reject these arguments and affirm
the district court. 
I. 
A. 
C.B. Trucking is a family-owned company that operates a
 residential solid waste collection business in southeastern Massachusetts.
From 1990 through 1994, the company collected residential solid waste in
Franklin and Medway, Massachusetts, pursuant to contracts with those towns.
In 1994, after a process of public bidding, Franklin and Medway, as well as
the nearby town of Norton, Massachusetts, awarded Waste Management
exclusive residential solid waste collection contracts. In securing these
 contracts, Waste Management outbid not only local operators such as C.B.
Trucking, but also national operators such as Browning-Ferris Industries and
Laidlaw Waste Systems, Inc. Each contract was for a three-year term and
required Waste Management to perform specified collection services for a fixed
price during the contract term. Waste Management's
bids for the Medway and Norton contracts were lower than the next lowest bids
by approximately $40,000 in each case. The company's final bid for the
Franklin contract at $1.58 million came in under C.B. Trucking's final bid
 by only about $4000. 
B. 
C.B. Trucking brought this action against Waste
 Management and WMX Technologies asserting that defendants had: (1)
 violated the Sherman Act, 15 U.S.C.A. 1, 2 (West 1997), by attempting

to monopolize the residential solid waste business in southeastern
Massachusetts through a practice of predatory pricing; (2) violated the
Robinson-Patman Act, 15 U.S.C.A. 13, 13a (West 1997), by engaging in
predatory pricing; (3) intentionally interfered with existing contracts between
C.B. Trucking and the towns of Franklin and Medway in violation of
Massachusetts law; and (4) engaged in unfair and deceptive business practices
in violation of the Massachusetts Consumer Protection Act, Mass. Gen. Laws
Ann. ch. 93A (West 1997). Defendants moved to
dismiss the complaint for failure to state a claim pursuant to Fed. R. Civ. P.
12(b)(6). At a hearing on the motion, the district court asked Waste
Management to submit an affidavit addressing the limited issue of whether its
bids for the three contracts at issue were below its costs. The court also
 advised C.B. Trucking that it could respond to Waste Management's
 affidavit as it saw fit. Following the hearing, Waste
Management submitted an affidavit from the employee who had prepared its
bids and managed the contracts at issue, stating that Waste Management had
not lost money on any of the contracts. The affidavit also alleged that
 Waste Management had lost out in bidding on other residential solid waste
contracts in the same geographic area during the relevant time period, and that
it currently faced competition in the area from approximately eighteen trash
haulers. After seeking and obtaining additional time to respond, C.B.
Trucking countered with an affidavit from its president who concluded that
Waste Management's bids must have been below its own costs because they
 were below C.B. Trucking's costs. Having solicited the
affidavits, the court converted defendants' Rule 12(b)(6) motion into a motion
for summary judgment. It then disposed of the predatory pricing claims by
 concluding that C.B. Trucking had failed to produce sufficient evidence
that Waste Management had engaged in below-cost pricing to withstand
summary judgment. It also declined to exercise supplemental jurisdiction
over the state law claims. On appeal, C.B. Trucking contests only the
dismissal of its Sherman Act predatory pricing claim. 
II. 
A. 
C.B. Trucking first asserts that the district court erred
 because it never expressly notified the parties of its intention to convert
defendants' motion to dismiss into one for summary judgment. Had the court
done so, C.B. Trucking contends, it would have sought additional time to
conduct discovery in order to gather the evidence needed to withstand the
motion. Rule 12(b) provides that a court shall convert
a motion to dismiss for failure to state a claim into one for summary
 judgment if "matters outside the pleadings are presented to and not
 excluded by the court." Fed. R. Civ. P. 12(b). We employ a functional
approach to the conversion process. See Rodrguez v. Fullerton Tires Corp.,

115 F.3d 81, 83 (1st Cir. 1997). Accordingly, we have not required a district
court to give express notice of its intention to convert if the surrounding
circumstances effectively place the parties on notice that the court has the
 option of treating the motion as a motion for summary judgment and the
parties have been given "reasonable opportunity to present all material made
pertinent to such a motion by Rule 56." Id. (quoting Fed. R. Civ. P. 12(b));
see also Chaparro-Febus v. International Longshoremen Ass'n, Local 1575, 983
F.2d 325, 332 (1st Cir. 1992) (treating failure to give express notice of
conversion as harmless error). Here, the circumstances
surrounding the conversion of defendants' motion to dismiss were sufficiently
clear to effectively place C.B. Trucking on notice that the district court
 intended to treat the motion as a motion for summary judgment. Rather
than relying on defendants' assertion that the complaint failed to sufficiently
allege below-cost pricing, the district court signaled its intention to delve into
the evidentiary sufficiency of C.B. Trucking's allegations by calling on the
 parties to submit affidavits addressing the issue. Given the court's
request for information that it could only consider consistent with Rule 12(b) if
it converted the motion to dismiss into a motion for summary judgment, C.B.
Trucking has no credible basis to complain that it was unfairly surprised by the
conversion. Nor can C.B. Trucking claim that the
conversion unfairly deprived it of the opportunity to submit responsive
materials on the below-cost pricing issue. The case had been pending for
more than a year when the district court called on the parties to submit
 affidavits on the pricing issue. Moreover, C.B. Trucking was given
 more than a month to prepare and file affidavits responding to Waste
Management's denial that it had engaged in below-cost pricing. Under these
circumstances, the district court acted well within its discretion in treating the
motion to dismiss as a motion for summary judgment. 
B. 
C.B. Trucking alternatively claims, based on Fed. R. Civ. P.
56(f), that the district court should have refrained from ruling on the converted
summary judgment motion so that it could have conducted discovery on the
below-cost pricing issue. We review the district court's decision to proceed to
the merits of the summary judgment question for abuse of discretion. See
Morrissey v. Boston Five Cents Sav. Bank, 54 F.3d 27, 35 (1st Cir. 1995). 
When properly invoked, Rule 56(f) allows a party opposing
 summary judgment additional time to conduct discovery on matters related
to the motion. See Resolution Trust Corp. v. North Bridge Associates, Inc.,
22 F.3d 1198, 1203 (1st Cir. 1994). To benefit from the rule, however, a
party must meet several requirements. First, although a request for Rule 56(f)
relief need not be expressly labeled as such, the party invoking the rule at a
minimum must ask the court to refrain from acting on the summary judgment
 request until additional discovery can be conducted. See Ayala- Gerena

v. Bristol Myers-Squibb Co., 95 F.3d 86, 92 (1st Cir. 1996); Dow v. United
Bhd. of Carpenters, 1 F.3d 56, 61 (1st Cir. 1993). In other words, a party
ordinarily may not attempt to meet a summary judgment challenge head-on but
fall back on Rule 56(f) if its first effort is unsuccessful. Second, a party
relying on Rule 56(f) must demonstrate that it was diligent in pursuing
discovery before the summary judgment initiative surfaced. See AyalaGerena, 95 F.3d at 92 ("Rule 56(f) is designed to minister to the vigilant,
 not to those who slumber upon perceptible rights."). Finally, the party
must "set forth a plausible basis for believing that specified facts, susceptible of
collection within a reasonable time frame, probably exist" and "indicate how
the emergent facts, if adduced, will influence the outcome of the pending
summary judgment motion." Resolution Trust Corp., 22 F.3d at 1203. C.B.
Trucking cannot satisfy any of these requirements. 
The only reference C.B. Trucking made in district court to
the need for additional discovery was a comment in its opposition to Waste
Management's affidavit in which the company's attorney stated, "[a]ccordingly,
this court should deny the defendants' motion and at a minimum allow the
plaintiff discovery on the issue of cost." C.B. Trucking accompanied its
opposition with an affidavit from its president attempting to address the
 below-cost issue on its merits. Because it is apparent from the
 opposition and the supporting affidavit that C.B. Trucking was content to
have the court act on the merits of the motion, its passing comment that the
court should deny the motion so that the parties could conduct additional
discovery is simply not sufficient to trigger Rule 56(f). 
Rule 56(f) relief was also unjustified because C.B. Trucking
was not diligent in pursuing discovery. Although C.B. Trucking
acknowledges that a plaintiff in a predatory pricing case must prove that the
prices a plaintiff complains of were below its competitor's costs, see Brooke
Group Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 223-26
(1993), the company conducted no discovery on this issue during the twentyone months in which this case was pending in the district court. Given this
failure, C.B. Trucking is in no position to complain of the court's decision
 to examine the evidentiary sufficiency of the predatory pricing claim. 
Finally, further delay in the resolution of Waste
 Management's motion was unwarranted because C.B. Trucking failed to
 identify any material evidence that it was likely to uncover if it was given
additional time to conduct discovery. As this court has recognized, a
plaintiff's speculative assertions that the defendant has unspecified facts in its
possession necessary for the plaintiff to develop its legal theories coupled with
conclusory statements that discovery should be commenced are "entirely
inadequate to extract the balm of Rule 56(f)." Paterson-Leitch Co. v.
 Massachusetts Mun. Wholesale Elec. Co., 840 F.2d 985, 989 (1st Cir.
 1988). At best, C.B. Trucking made a non-specific request that the court
deny the motion so that it could conduct additional discovery. This type of
general and unsupported statement will not satisfy Rule 56(f). Accordingly,
the district court was well within its discretion in proceeding to the merits of the
summary judgment motion. 
C. 
Having determined that the district court had the discretion
to rule on defendants' converted summary judgment motion without giving C.B.
Trucking express notice or additional time to conduct discovery, we have little
difficulty in concluding that the court properly disposed of the predatory pricing
claim. A plaintiff cannot prevail on a predatory pricing
claim unless it proves that the prices it complains of are below its
 competitor's costs. See Brooke Group Ltd., 509 U.S. at 223-26.
 Further, we have recognized that a company that "prices its own product
or service at or above its own costs does not violate the Sherman Act merely
because its costs, and thus its prices, are lower than a rival's costs." Tri-State
Rubbish, Inc. v. Waste Management, Inc., 998 F.2d 1073, 1080 (1st Cir. 1993).
 Defendants challenged C.B. Trucking's ability to prove
 its predatory pricing claims by filing an affidavit of the employee who
prepared the bids and managed the contracts at issue, stating that Waste
Management had not lost money on any of the contracts. This assertion was
sufficient to compel C.B. Trucking to come forward with enough competent
evidence to permit a reasonable factfinder to conclude that Waste Management
had engaged in below- cost pricing. See LeBlanc v. Great American Ins. Co.,
6 F.3d 836, 842 (1st Cir. 1993). Rather than attempting to counter defendants'
 assertion with hard evidence, however, C.B. Trucking offered only its
president's statement that Waste Management must have engaged in below-cost
pricing because its bids exceeded C.B. Trucking's costs. Conclusory
statements of this type are insufficient to sustain a predatory pricing claim in
the face of a properly supported summary judgment motion. Consequently,
based on the record the parties presented, we agree with the district court's
 decision to summarily dispose of C.B. Trucking's predatory pricing claim.
 III. 
For the reasons discussed above, we find that the district
court properly granted summary judgment against plaintiff. Accordingly, the
judgment of the district court is affirmed. </pre>
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C.B. Trucking, Inc. v. Waste, 1st Cir. (1998)

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<br>violated the Sherman Act, 15 U.S.C.A. 1, 2 (West 1997), by <br>attempting

approach to the conversion process. See Rodrguez v. <br>Fullerton Tires Corp.,

<br>request until additional discovery can be conducted. See Ayala- <br>Gerena

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